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Friday, September 14, 2012

Some Takeaways from the Tellabs Analyst Conference

I just got back from the Tellabs analyst conference. Being an access person and a data nerd, the two areas that I found most interesting were the optical LAN offerings and Tellabs’ analytics service. 

Optical LAN (or fiber to the desk) is a concept that has been around for almost as long as optical fiber, though the business case has been tenuous and adoption has been low. Tellabs has taken the approach of adding enterprise functionality to its residential GPON technology, which may have changed the economics sufficiently to improve the business case.

Tellabs has gotten some traction in the optical LAN business with mostly government customers. Based on these customers’ installations, the company is showing a business case with 70 percent CapEx savings, 80 percent lower power consumption and space savings of 90 percent. Additionally, Tellabs claim that the reduced weight loading from eliminating long runs of copper cables along with the power reduction and space savings allowed a customer to reduce the cost of new building construction by 21 percent. Unfortunately, we could not see any hard data to back up these numbers.

If these two claims of cost savings can be proven in a broad base of installations, we could see some momentum for the optical LAN market. The challenges to greater market acceptance will be 1) the inertia of active Ethernet switching being the de facto standard for LANs and 2) persuading architects, general contractors and higher level decision makers that optical LAN is a bona fide option. Both challenges are daunting but not insurmountable, and seeing how the market reacts to this new approach will be interesting. The stakes are high; growing this market would be a big shot in the arm for Tellabs and a potential hit for the incumbent enterprise Ethernet switch vendors. 

Additionally, Tellabs mentioned the traction it was gaining with its Insight Analytics. Insight Analytics collects data from the network elements from the RAN to the packet core and can correlate the data to individual flows and devices. As a result, Tellabs can give a unified view of the network and how it impacts services. For example, Insight Analytics can provide information on shared node risk or unprotected paths in the backhaul network, bandwidth consumption by application or subscriber, and measure the subscriber’s experience (for example, page load time). 

Tellabs has several testimonial quotes from customers that attest to the value of analytics, and it is easy to understand how customers are excited about having more data available to help make smart decisions about network operations and planning. The challenge Tellabs faces is selling the value of an integrated view into a highly stove-piped operator. 

While these two areas are only a small part of Tellabs’ business, they may be important contributors over the longer term if the company successfully brings these products to market.

David Dines

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